Nielsen: "COVID-19 Impact Lasts Over 6 Months... Economic Blow and Franchise Contraction"

Active Transition Between Online and Offline Purchase Channels... Emphasis on the Role of Lifestyle-Oriented Channels
Simultaneous Growth in Hygiene Items, Stockpiled Food, and Airtight Containers... Notable Decline in Coffee Shop Sales

[Asia Economy Reporter Lee Seon-ae] Global integrated information analysis company Nielsen Korea announced on the 11th that the impact related to the novel coronavirus infection (COVID-19) is expected to last for at least six months, and that changes across the entire economy are inevitable.

Due to the spread of confirmed COVID-19 cases and deaths, there is active transition occurring between domestic online and offline purchasing channels. From January 20, when the first domestic COVID-19 case was confirmed, purchases through offline channels (discount stores, chain large stores, cooperative marts) increased compared to the period before January 20. However, starting from the last week of January, when the number of confirmed cases began to spread domestically, restrictions on going out and fear formed, leading to a rapid shift in purchasing behavior toward online channels.

As of mid-February, the number of online purchases increased by 28% compared to January, and the usage time of major online apps (open markets, social commerce, discount stores) increased by 19% compared to January (weeks 1-4 of 2020 compared to weeks 5-8).

However, due to hygiene and stockpiling food shortages in online purchasing channels and delivery area restrictions, a reverse phenomenon has appeared where demand is concentrated again on offline purchasing channels, mainly neighborhood-type channels such as personal large supermarkets. This emphasizes the role of lifestyle-oriented channels during crisis situations (purchase volume in personal large supermarket channels increased by 32% in week 8 compared to week 7 of 2020).

In offline channels where sales changes appeared most rapidly, sales of hygiene-related items, including liquid soap which increased by 200%, as well as stockpiling food items, showed high sales volumes. In particular, in traditional stockpiling room-temperature product categories, instant soups and stews grew by 44%, frozen and refrigerated products such as frozen pizza grew by 23%, and frozen cutlets by 18%, indicating that the stockpiling of home meal replacement items at home is expected to intensify if the COVID-19 situation prolongs.

Additionally, in sealed container items used for storing home-cooked food, glass sealed containers increased by 26%, and coffee capsules, a preferred food item, grew by 154%, highlighting the growth of substitutable items within the home (weeks 1-7 of 2019 compared to weeks 1-7 of 2020).

A temporary closure notice is posted at a small business store in Jung-gu, Seoul due to the impact of the novel coronavirus infection (COVID-19). Photo by Kim Hyun-min kimhyun81@

Especially as the COVID-19 crisis alert was raised to a severe level, social distancing measures such as refraining from going out and dining out have caused a decline in the franchise industry, a representative dining-out market. Nationwide, the number of payments at cafes decreased by 16%, and in Daegu, where confirmed cases were concentrated, it dropped by 39%, showing a more pronounced decline in non-staple sectors like cafes compared to staple food sectors such as hamburgers, chicken, and pizza (week 8 compared to week 7 of 2020).

Choi Kyung-hee, CEO of Nielsen Korea, stated, “Based on past experiences with Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS), the impact related to COVID-19 is expected to lead to macroeconomic indicator instability, contraction of the Fast Moving Consumer Goods (FMCG) market, and changes in consumers’ lifestyle patterns and consumption behaviors.” She added, “Especially, the contraction in consumption related to outdoor activities is not only limited to Daegu, where confirmed cases are concentrated, but overall social anxiety is gradually transforming consumers into untact (contactless) home dwellers. Considering this, it is important to prepare mid- to short-term countermeasures to minimize the impact of consumption contraction.”

This content was produced with the assistance of AI translation services.